Toxic Substances Control: Understanding the Impact on Industry

By Julie Byrne and Barry McLaughlin

Controls on toxic substances in the United States are getting tougher, raising challenges to compliance and record keeping for chemical manufacturers, importers, and handlers. On June 22, 2016, U.S. President Barack Obama signed the Frank R. Lautenberg Chemical Safety for the 21st Century Act (H.R. 2576), which modernizes the 40-year-old Toxic Substances Control Act (TSCA). As a result, businesses face a complex array of rules and regulations that carry significant penalties for noncompliance.

Toxic Substances Control

The U.S. Environmental Protection Agency (EPA) already requires every manufacturer and importer to provide an overview of chemicals in commerce in the United States. Under the auspices of TSCA’s Chemical Data Reporting (CDR) rule, the EPA requires companies to keep a detailed inventory of listed substances they manufacture domestically, process, or import to the United States. Under the CDR rule, companies are also tasked with reporting the quantity, type, and method of use for each manufacturing or import site every four years.

The CDR reporting deadline covering the years 2012 to 2015 is quickly approaching. Complicating the situation, it’s anticipated that both new and established businesses alike will need to add increased chemical reporting requirements to an already stringent list of compliance obligations. It’s therefore important for businesses to fully understand TSCA compliance requirements under the current CDR rule to ensure compliance and effectively mitigate their risks. Preparation, organization, and thorough planning are key to comprehensive compliance and risk management.

EPA’s Expanding Role

With the adoption of the Chemical Safety for the 21st Century Act, the EPA is tightening reporting requirements for toxic substances. The Act places renewed emphasis on the submission and compliance guidelines of the CDR requirement. With an expanded role for the EPA—and a tightening of regulations on businesses—accurate documentation and timely reporting have never been more vital.

The Act increases the EPA’s role in the areas of chemical monitoring, controls, and risk assessment. It broadens the agency’s authority to ban chemicals and may require testing on new and existing chemicals. Those changes in the law mandate that businesses maintain comprehensive and accurate chemical data.

The Act also calls for the EPA to review all chemicals currently in commercial use and update the TSCA inventory. A list of high-priority chemicals is being created to undergo full safety assessment and review against current safety standards. The Act directs the EPA to determine a list of active chemicals in commerce and requires companies to give notification when using previously determined inactive chemicals. It also mandates that the EPA develop a new fee-based review system.

What’s Exempt under CDR—and Who Has to Report?

Currently, all chemical manufacturers and importers of chemicals from outside the United States with total annual sales of at least $40 million are required to report under the CDR rule, unless a given chemical is considered exempt. Chemical manufacturers and importers of chemicals from outside the United States with total annual sales less than $40 million and handling chemicals in volumes less than 100,000 pounds are exempt from reporting under CDR unless a chemical is subject to a TSCA action. Chemical manufacturers and importers of chemicals from outside the United States with total annual sales less than $4 million are exempt from reporting under CDR no matter what the volume of any individual chemical is unless a chemical is subject to a TSCA action.

Suppliers that have not released the chemical identity of a material are required to submit supporting information for the CDR. Any toll manufacturer that has not released processing information must provide supporting information as a joint submitter in addition to its own company report. Chemical identity or processing information not provided directly to the submitter must be submitted through the e-CDR database.

Along with volume reporting, companies will need to collect additional data for the principal reporting year, which is 2015 for the current period. Companies will need to document how each chemical is used, how the chemical is processed, and its concentration. Further, companies will need to identify the number of workers potentially exposed and the anticipated duration of exposures. The industrial sector and function must be specified as well as the typical usage of the chemical (consumer or commercial) and whether the material is, or is intended to be, a component in a product used by children. For partially exempt chemicals, only volume reporting is required.

Reports must be filed for each legal site within a company, not simply for the company as a whole. If a company maintains multiple manufacturing sites in the United States above the production threshold, each site must report. Sites must also report if they exceed $40 million in annual sales. Volumes need to be reported only if the material is for commercial use. Companies are not required to report TSCA-listed substances if used for research or development. Other exemptions apply depending on a substance’s composition, usage, and worker exposure.

The burden of determining reporting levels or securing exemptions lies with the manufacturer and importer. Improper reporting or failure to comply can bring significant penalties and financial risk. A company’s authorized official is responsible for the accuracy of its information, and each submission must be complete with all claims of confidentiality validated. There may be civil and criminal penalties for failing to submit reports or knowingly submitting inaccurate reports.

Best Practices to Reduce Risk

TSCA compliance rests on a foundation of sound organization, preparation, and quality collection and processing of data. A detailed account of a company’s operations and its chemical compounds, sources, and uses may mean the difference between a successful report and the potential for costly penalties.

The CDR requires reporting every four years, and 2015 is the current reporting year. The upcoming reporting period began on June 1 and remains open until September 30, 2016. Well-prepared businesses may already have their TSCA compliance strategy in place; the rest will need to catch up (which at this point may warrant professional TSCA services consultants) or prepare for potentially costly repercussions of noncompliance.

To ensure conformance, a complete CDR Form U must be filed using e-CDR for each applicable site by September 30, 2016. The best practice is to be ready for submission as early as possible. It’s important to develop a plan for chemical data collection wherever the requisite amounts of listed substances are commercially employed. Data for the reporting years 2012 to 2015 should be currently available, either on hand or from your suppliers or toll manufacturers. With multiple sites and outside entities, data takes time to locate and verify. The more time a company dedicates to the process, the more likely it is to compile a complete, correct, and TSCA-compliant report.

Assigning an authorized CDR official within a company can streamline filings. A practiced representative understands what information is needed and knows where and how to locate it. A familiarity with EPA requirements and the submission process is a valuable key to CDR compliance. Companies should appoint someone with access to necessary information and the ability to process and perform regular audits. It’s important to maintain open channels between the official and active sites regarding process, data, and requirement updates and to use any previously filed CDR data from a given company’s manufacturing, importing, or processing sites to create an information benchmark. Even if a company has undergone developmental or organizational changes, past data gives a useful road map to active sites, high-volume substances, and levels of commercial activity.

Looking into the Past

It may also be helpful to create a master materials list that joins historical and current data. For convenient reference and CDR compliance, a company can include each chemical identity, the Chemical Abstract Service (CAS) name and number, site locations, commercial use, and total manufacture and import volumes. It remains a company’s obligation to determine whether any of its chemicals are subject to TSCA actions. Current, properly formatted information will help identify areas of potential or required action, ease the reporting process, reduce errors, and minimize a company’s exposure.

If a business manufactures chemicals as well as imports them, the EPA maximum threshold is based on a substance’s combined volume. Past filings and a master list will enable an authorized official to understand the scope of business and the reporting requirements. Gathering and auditing information for multiple chemical and site reports requires additional time and effort. It’s recommended that companies arrange a master list to reflect each of these historical, existing, and, where possible, evolving elements.

Costs of Noncompliance

In dealing with potentially toxic substances, saving all documentation is critical. The EPA requires records to be kept for five years. For example, 2012 data must be kept until June 30, 2017, and 2016 data must be kept until September 30, 2021. It’s recommended to keep documents for extended periods for reference purposes during future reporting.

The proposed 2016 CDR follows all earlier TSCA regulations when it comes to enforcement. Failing to submit the 2016 CDR for an organization, failing to keep required records, or failing to comply with an EPA audit if requested is illegal. The EPA can impose civil and criminal penalties of up to $37,500 for each civil or criminal violation. Not being aware of regulations or the reporting process is not considered an acceptable reason for failing to report.

The newly signed Chemical Safety for the 21st Century Act reinforces the need for thorough and accurate companywide record keeping. The process, including data accumulation, documentation, and regular auditing, is ongoing and should become a permanent, auditable facet of any business.

For a manufacturer and importer of chemical substances, diligence regarding existing and evolving law may be vital to efficiency and profitability. Knowledge of the legal and regulatory landscape should be as ingrained as any other internal procedure. Failure to understand processes, responsibilities, or a company’s exposure can result in significant penalties.

Site inspection and accurate record keeping are keys to fulfilling a company’s legal reporting requirements. The assignment of an internal or, if necessary, external expert simplifies the filing process while reducing uncertainty. But beyond chemical and material inventories, greater awareness of operations and responsibilities provides a business with a stronger legal and operational foundation for thorough compliance.

Julie ByrneBarry Mclaughlin

Julie Byrne is a chemical regulatory consultant and Barry McLaughlin is authoring project manager/TSCA specialist at 3E Company, a Verisk Analytics (Nasdaq:VRSK) business. 3E offers a comprehensive suite of data and solutions for environmental health and safety (EH&S) compliance management.